Correlation Between De Rucci and Harbin Hatou

Can any of the company-specific risk be diversified away by investing in both De Rucci and Harbin Hatou at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining De Rucci and Harbin Hatou into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between De Rucci Healthy and Harbin Hatou Investment, you can compare the effects of market volatilities on De Rucci and Harbin Hatou and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in De Rucci with a short position of Harbin Hatou. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Rucci and Harbin Hatou.

Diversification Opportunities for De Rucci and Harbin Hatou

0.64

Correlation Coefficient

De Rucci  Harbin Hatou

Poor diversification

The 3 months correlation between 001323 and Harbin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding De Rucci Healthy and Harbin Hatou Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbin Hatou Investment and De Rucci is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on De Rucci Healthy are associated (or correlated) with Harbin Hatou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbin Hatou Investment has no effect on the direction of De Rucci i.e., De Rucci and Harbin Hatou go up and down completely randomly.

Pair Corralation between De Rucci and Harbin Hatou

Assuming the 90 days trading horizon De Rucci Healthy is expected to generate 0.64 times more return on investment than Harbin Hatou. However, De Rucci Healthy is 1.56 times less risky than Harbin Hatou. It trades about 0.07 of its potential returns per unit of risk. Harbin Hatou Investment is currently generating about 0.03 per unit of risk. If you would invest  2,858  in De Rucci Healthy on October 9, 2024 and sell it today you would earn a total of  983.00  from holding De Rucci Healthy or generate 34.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

De Rucci Healthy  vs.  Harbin Hatou Investment

De Rucci Healthy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in De Rucci Healthy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, De Rucci sustained solid returns over the last few months and may actually be approaching a breakup point.

Harbin Hatou Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbin Hatou Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Harbin Hatou is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with De Rucci and Harbin Hatou

The main advantage of trading using opposite De Rucci and Harbin Hatou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Rucci position performs unexpectedly, Harbin Hatou can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Harbin Hatou will offset losses from the drop in Harbin Hatou's long position.

The idea behind De Rucci Healthy and Harbin Hatou Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.